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Google's Nexus 7: Sold Out?

In what’s being reported as the result of overwhelming demand and shipment delays, Google has stopped taking orders for a certain version of the Nexus 7—its first tablet offering. The decision by Google (NASDAQ:GOOG) is only affecting orders for the 16-gigabyte tablet, not the 8 gig one.

Reports of the popularity of the product have been noted for several days. Our own Forbes Contributor, Robert Hof, wrote a relatively positive review of the device, noting that when a new product sells out, it can also mean that the company producing it chose to under supply retailers as part of a marketing ploy to underscore high demand.

Hof’s review highlighted the Nexus 7’s size – 7 inches – was convenient and easy to use. Three prominent tech reviewers – The Wall Street Journal’s Walt Mossberg, David Pogue at The New York Times, and venture capitalist and TechCrunch columnist MG Siegler – all favored the device.

Might we see a 7-inch iPad come out of Cupertino? Trefis, a stock analysis service that breaks down a stock price by the contribution of a company’s major products and businesses, has done an analysis showing that an Apple (NASDAQ:AAPL)product in that category might make good sense.

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“…noting that when a new product sells out, it can also mean that the company producing it chose to under supply retailers as part of a marketing ploy to underscore high demand…”

That is one possibility. But it is also possible that Google under estimated the demand for their 16GB version of the tablet. Considering their form factor and price range, it is clear that Google wants to compete with Amazon’s Kindle rather than Apple iPad market. Since Amazon sold a bunch of their Kindle at $199.00 with only 8GB; it is easy for Google to assume that the $199.00 with 8GB price point as their main product sales. They just might not have realized people actually preferred to pay the extra $50 for the 16GB version instead of their baseline $199 version and therefore under supplying the 16GB to the retailers.

If Google really want to create the illusion of market demand by under supplying their Nexus 7 tablet, they would have done so with their 8GB version as well. Why would they only do it for their 16GB version only? This whole thing points to the fact that it was a simple miscalculation of the market demand by Google rather than a marketing ploy.

The missing factor here is how many were ready to ship in the first place. Or perhaps there were delays in production/shipment.

Though I wish I’d been a fly on the wall during the discussion that led to the simple miscalculation that a tablet with double the memory for an extra $50 would be a less popular product.

If it was, in fact, a simple miscalculation, do you feel Google should have completed more comprehensive market surveys? Where did the company make the error and how would it not do its homework on consumer demand on the eve of releasing its first ever tablet product?

It is not all that inconceivable for Google to make this kind of miscalculation. Google never had much experience in selling hardware in the first place. Just look at their first Google Android phone and their recent Nexus Q. Do you think they have done a lot of marketing survey for these products? What makes you think that Google must have done a lot of these type of surveys before they would release their products? Even if they have, do you think just by conducting market surveys will guarantee market success?

Apple, in particular Steve Jobs, is notoriously famous for selling their products without doing any market studies and surveys and yet they seem to be doing just fine with most of their product releases. The fact is mistakes like this is easy to make when most people just assume the $199 price point is what most people was looking for in the 7″ tablet with Kindle’s success. Keep in mind that Barnes and Noble sold similar 7″ tablet at $250 with 16GB as well during the time when Kindle was released and Amazon kicked their butt in unit sales. Hindsight is 20/20. It is also easy for someone like yourself to say how can Google possibly make such a mistake after the fact; but before things actually happens, it never seems as obvious at the time.

Thanks for the comment. I’m not sure that Google has made a mistake at all and I’m not convinced the 16G sold out due to a “simple miscalculation.” Whether the device sold out due to a marketing ploy, a hedge that the Nexus 7 wouldn’t catch on and the company was afraid of swimming in unsold units, shipment delays (as Google has said) or a combination of those reasons; as our contributor, Robert Hof, noted: we can’t really tell what the halt to orders means until we know exactly how many were sold.

B&N’s Nook couldn’t beat Kindle, but there’s more to that equation than price. Apple’s outlook on market studies may have reflected Steve Jobs’ philosophy, but I’m not sure Larry Page is Steve Jobs. I would be very interested to see what kind of market research did. It might make a good read.

So far, though, the Nexus has enjoyed some good reviews. I hope for Google’s sake the supplies continue, and soon, because it the company could ride those reviews to some great sales figures.

Its true that no one can tell for sure 100% what the real reason of the shortage is, but yet many people are very quick to jump to insinuate that it is a marketing ploy. As I have pointed out before, there is more evidence to show that the shortage has more to do with Google “miscalculation” on the different model’s market demand rather than a intentional under supply to their retailer as a marketing ploy to hype up demand. If Google is try to intentionally under supply their retailers, they would have done it with both models and not just the 16GB. It would have looked a lot better to show everyone that ALL of the Nexus tablets are sold out rather than just the 16GB.

As for Larry Page is not Steve Jobs, no one say that he is; but that does not mean others will not try to emulate Steve Jobs. Besides, it wasn’t just Steve Jobs that is famous for not conducting market survey; Henry Ford was also famous for doing the very same thing many decades ago and made famous with the quote “If I’d asked customers what they wanted, they would have said a faster horse and buggy.” The fact is market research does not guarantee success and many successful businesses are successful because its founders have great intuitions and instincts.

I ordered two on July 3rd, pre-order from J&R. Still waiting with a backorder notice, and no sign of when they will show up. For the price I paid ($234 each) I don’t mind waiting at all, but I wish I had some idea when Asus would be able to get more to these brick and morter stores.